News Release

Romney’s Class: “Dependent on Government Subsidies, Handouts and Protection”

JAMES S. HENRY [email]
Available for a limited number of interviews, Henry is lead researcher for the recently released report “The Price of Offshore Revisited” and former chief economist at the international consultancy firm McKinsey & Co. He said today: “The real story here ought to be the outrageous growth of inequality in America — and the role of offshore secrecy in it. This has only served to reinforce, in turn, the rise of ‘representation without taxation’ for the top 1 percent.

“Indeed, if there is a class that is truly dependent on government subsidies, handouts and protection that it doesn’t pay for, it is this new American aristocracy. So it is no accident that we may soon come very close to electing a president whose sole passion and preoccupation is to serve and defend the interests of this ruling, avaricious, tax-dodging class. Tocqueville must be spinning in his grave.

“The fact is, contrary to popular mythology, we no longer live in a country with a progressive tax system, much less democratic representation or elections.

“Rather, we have a system where (1) the wealthiest 1 percent no longer pay a higher share of their incomes in total taxes; (2) they no longer pay a higher share of the total cost of government than the rest of us; and (3) the wealthiest 1 percent receives a growing, disproportionate share of government spending, subsidies and incentives, especially at the federal level.

“These first three realities are not surprising, given that (4) the wealthiest 1 percent has a disproportionate share of political power and voice.

“Once you take the growth of offshore tax dodging by the wealthy into account, combined with the fact that state and local governments now account for nearly 3/4ths of all taxes, the shift to a regressive tax system has been really striking.

“First, the post-tax share of income of the top 1 percent in the U.S. — over 21 percent — now exceeds the share of the bottom 50 percent.

“Second, the top 1 percent’s share of total taxes paid — federal, state, and local — is actually now LESS than its total share of income.

“Third, the total tax bill paid by this group is also, on average, LESS than 17 percent of the 1 percent’s total income — on average, a LOWER fraction of total income than the rest of us pay.”

For background, see the ABC News article on Henry’s offshore tax findings: “The super-rich are hiding at least $21 trillion in accounts outside their home countries, according to a report by an activist group called the Tax Justice Network. The wealth hidden in these tax shelters is the equivalent of the United States and Japanese economies combined, according to the report, ‘The Price of Offshore Revisited.’”